To achieve diversification Select one: O a. Your portfolio should have 10 stocks from different countries O b. Your portfolio should have more than 25 stocks from different countries O c. The number of stocks in your portfolio should be more than 25 O d. The number of shares in your portfolio should be less than 10

To achieve diversification Select one: O a. Your portfolio should have 10 stocks from different countries O b. Your portfolio should have more than 25 stocks from different countries O c. The number of stocks in your portfolio should be more than 25 O d. The number of shares in your portfolio should be less than 10

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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1. What is your expected portfolio return of an investment portfolio with a 60/40 allocation of stocks and bonds, respectively, if you expect long term equities to return 8%, and long term bonds to return 2%? 5.6% 6.2% 4.8% 5.1% 2. You are looking into developing your first investment portfolio. After assessing your risk tolerance, you believe that an 90/10 allocation of stocks and bonds, respectively, is where you want to begin. You believe that 7% is what stocks will return over the next ten years, and 4% is what you expect to return in your bond portfolio. If you invest $300/month for the next ten years, what will your portfolio be worth? $51,077 $47,579 $52,843 $44,880
Finance Your portfolio consists of 75 shares of CSH and 60 shares of EJH, which you just bought at 21 and 30 per share, respectively. a. What fraction of your portfolio is invested in CSH? In EJH? b. If CSH increases to 23 and EJH decreases to 27 , what is the return on your portfolio? fraction invested CSH is fraction invested EJH Return % Note Do not provide handwritten solution. Maintain accuracy and quality in your answer. Take care of plagiarism. Do not provide Excel Screet shot rather use tool table Answer completely.
You are thinking about investing in either X corp, or Y corp. Based on the following market measures, which company could be the best option based on possible return of investment? x y Price/Earnings Ratio 10.39 12.27 Earnings per Common Share 3.5 5.4 Divident Payout .464 .320
A portfolio analyst has been asked to allocate investment funds among three different stocks. The relevant data for the stocks is shown in the following table. If the goal is to maximize return while maintaining risk within acceptable bounds (in this case, a portfolio standard deviation of no more than 20%), find the proper allocation of the funds to each stock. Return Risk (Standard Deviation Stock (R) A 20% to S) 25% Pair of Stocks Joint Risk (Covariance) A to B 0.05 B 10% 12% A to C 0.075 C 15% 10% B to C -0.05 ces What proportion of the portfolio should be allocated to stock]B?
Suppose that the index model for two Canadian stocks HD and ML is estimated with the following results: RHD =-0.03+2.10RM+eHD R-squared =0.7 RML =0.06+1.60RM+eML R-squared =0.6 σM =0.15 where M is S&P/TSX Comp Index and RX is the excess return of stock X. For portfolio P with investment proportion of 0.4 in HD and 0.6 in ML, calculate the systematic risk, non-systematic risk, and total risk of P. xx
2 local Philippine equities have the same risk (standard deviation) and return expectations: 10 % expected return and 20 % risk in terms of standard deviation. Suppose you wish to create an equally weighted portfolio (50% in each equity) to examine the effect of correlation on standard deviation/risk. Calculate the expected portfolio return and risk if the correlation is 1.0.
On the basis of the two stocks' expected and required returns, which stock would be more attractive to a diversified investor? _______________ Calculate the required return of a portfolio that has $6,000 invested in Stock X and $5,000 invested in Stock Y. Do not round intermediate calculations. Round your answer to two decimal places. rp = __________% If the market risk premium increased to 6%, which of the two stocks would have the larger increase in its required return?
Baghiben
If you were to choose from the following combinations of stocks to form a portfolio, which portfolio is the best for the benefit of diversification? Delta Airline and Target Coke and Pepsi Target and Walmart Duke Energy (just one) Delta Airline and American Airline
As the chief investment officer for a money management firm specializing in taxable individual investors, you are trying to establish a strategic asset allocation for two different clients. You have established that Ms. A has a risk-tolerance factor of 8, while Mr. B has a risk-tolerance factor of 27. The characteristics for four model portfolios follow: ASSET MIX Portfolio Stock Bond ER σ2 1 6 % 94 % 9 % 6 % 2 25 75 10 10 3 67 33 11 14 4 88 12 12 24 Calculate the expected utility of each prospective portfolio for each of the two clients. Do not round intermediate calculations. Round your answers to two decimal places. Portfolio Ms. A Mr. B 1 2 3 4 Which portfolio represents the optimal strategic allocation for Ms. A? Which portfolio is optimal for Mr. B? Portfolio represents the optimal strategic allocation for Ms. A. Portfolio is the optimal allocation for Mr. B. For Ms. A, what level of…
7. Diversification and risk The graph shows the relationship between risk, measured as the standard deviation of a stock portfolio's return, and the number of different stocks in the portfolio for a hypothetical stock market. RISK (Standard deviation of portfolio return) 60 20 01 4 True 10 20 30 NUMBER OF STOCKS IN PORTFOLIO True or False: Increasing the number of stocks in a portfolio reduces firm-specific risk. False 40 ?
b. Calculate the covariance for the above stock. c) Does the combination of the above stock can be considered as an optimum diversification? Justify your answer.

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